Prepare a statement of cash flows. Also assume the following:

a. The owner's initial investment consists of $38,000 cash and $46,000 in land in exchange for its common stock.

b. The company's $18,000 equipment purchase is paid in cash.

c. The accounts payable balance of $8,500 consists of the $3,250 office supplies purchase and $5,250 in employee salaries yet to be paid.

d. The company's rent, telephone, and miscellaneous expenses are paid in cash.

e. No cash has been collected on the $14,000 consulting fees earned.

Question

Business

Ashlee Huff

13 April, 17:34

Prepare a statement of cash flows. Also assume the following:

a. The owner's initial investment consists of $38,000 cash and $46,000 in land in exchange for its common stock.

b. The company's $18,000 equipment purchase is paid in cash.

c. The accounts payable balance of $8,500 consists of the $3,250 office supplies purchase and $5,250 in employee salaries yet to be paid.

d. The company's rent, telephone, and miscellaneous expenses are paid in cash.

e. No cash has been collected on the $14,000 consulting fees earned.

+2

Answers (1)

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Hannah Simpson · Answer 1

11,360

Explanation:

Ebony Ernst Statement of Cash Flow

Cash flow from operating activities:

Payment towards expenses:

Payment of salary 1,750

Payment of rent 3,550

Payment of telephone expense 760

Payment of misc. expense 580

Total of Cash flow from operating activities 6640

(1750+3550+760+580)

Cash flow from Investing activities:

Purchase of office equipment (18,000)

Cash flow from financing activities:

Cash from common stock 38,000

Cash paid (2,000)

Cash flow from financing activities (38,000-2,000) 36,000

Net cash flow during the year (18,000-6,640) 11,360

Beginning balance 0

Year end cash balance 11,360